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  5. The Unequal Effects of Liberalization: Evidence from Dismantling the License Raj in India

American Economic Review

ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)

The Unequal Effects of Liberalization: Evidence from Dismantling the License Raj in India

  • Philippe Aghion
  • Robin Burgess
  • Stephen J. Redding
  • Fabrizio Zilibotti
American Economic Review
vol. 98, no. 4, September 2008
(pp. 1397–1412)
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Abstract

We study whether the effects on registered manufacturing output of dismantling the License Raj—a system of central controls regulating entry and production activity in this sector—vary across Indian states with different labor market regulations. The effects are found to be unequal across Indian states with different labor market regulations. In particular, following delicensing, industries located in states with pro-employer labor market institutions grew more quickly than those in pro-worker environments. (JEL J50, L52,L60, O14, O15, O25)

Citation

Aghion, Philippe, Robin Burgess, Stephen J. Redding, and Fabrizio Zilibotti. 2008. "The Unequal Effects of Liberalization: Evidence from Dismantling the License Raj in India." American Economic Review, 98 (4): 1397–1412. DOI: 10.1257/aer.98.4.1397

Additional Materials

JEL Classification

  • J50 Labor-Management Relations, Trade Unions, and Collective Bargaining: General
  • L52 Industrial Policy; Sectoral Planning Methods
  • L60 Industry Studies: Manufacturing: General
  • O14 Industrialization; Manufacturing and Service Industries; Choice of Technology
  • O15 Economic Development: Human Resources; Human Development; Income Distribution; Migration
  • O25 Industrial Policy